Legislating Away the Effects of the ACA through the Opportunity to Work Ordinance

When the Affordable Care Act (ACA) mandated benefits to all full-time employees, it did not mean that additional revenue appeared to magically cover the increased employee expense costs.

As a result, some employers turned full-time positions into part-time positions to fill their coverage needs. But local cities have taken to regulating the use of part-time positions to offset the results of the ACA.

San Jose is one of the newest cities to regulate employers rights to hire part-time employees. Patterned after a portion of San Francisco’s restrictive scheduling ordinance, San Jose’s Opportunity to Work ordinance mandates what employers can do when additional hours must be filled.

Overview of the Opportunity to Work Ordinance

The Opportunity to Work was a voter’s initiative, Measure E, that was approved at the ballot in November 2016. It went into full force on March 13, 2017.

Also dubbed San Jose’s scheduling ordinance, it impacts how employers can assign or hire for extra hours or shifts.

However, unlike some of the other recent scheduling laws such as those passed in Oregon and Seattle, it does not mandate time limits on employee schedules, resting hours, or fine employers for any changes that occur.

Instead what the ordinance does is require that employers offer any extra hours or shifts to existing employees before they can hire any permanent, seasonal, or temporary help.

Businesses Covered Under Measure E

Under the new ordinance, any business that has at least 36 employees or more is covered under the new law.

Employers include businesses that are subject to San Jose business tax or who own a place of business in San Jose, even if they are exempt from the business tax.

That means that both private and nonprofit businesses are covered under the ordinance. The employee count includes both part-time and full-time employees.

Chain businesses must count employees at all chains, even if only 1 employee works in San Jose. Chain businesses owned by franchisees must count all the employees at all the locations owned by that franchise.

If the business is not a chain business, then only the San Jose employee’s count under the employee count for purposes of the ordinance.

Covered Employees under the Opportunity to Work

One unique aspect of San Jose’s law is that it applies to businesses regardless of industry, trade or employee skill set.

Employees are considered covered if they work at a business with 36 or more employees and meet 2 other requirements.

First, the employee must be eligible for minimum wage under California’s minimum wage law. Secondly, the employee must work for the employer at least 2 hours in a calendar week in the city limits of San Jose.

However, the ordinance doesn’t address employees who are stationed outside of San Jose but work 2 hours within the city.

Many questions remain.

For example: How are these employees subject to the law? Are hours outside the city to be made available to them? How do hours inside the city affect their usual work locations? Lastly, this applies to nonexempt employees.

36 or more employees

Employee is eligible for minimum wage

Employee works at least 2 hours in San Jose city limits in a week.

Exclusions to the Ordinance

Sponsored by a coalition of Labor Unions which garnished support for this measure, all businesses who have a union agreement or a collective bargaining agreement are exempt from the restrictions of this law.

This is common practice for both sick leave laws and restrictive scheduling laws in order to strongly encourage businesses to unionize.

In addition, businesses who can demonstrate reasonable steps to comply with the ordinance but that full compliance would be “impractical, impossible, or futile” can be granted a “hardship exemption” for up to 12 months.

The Office of Equity grants the exemption. Lastly, Welfare-to-Work participants can drop out of participation although the programs are subject to the ordinance as well.

Unionized businesses are exempt

A 12-month “hardship exemption” can be granted

Welfare-to-Work participants can opt out.

Requirements of Businesses with Extra Hours

The Ordinance requires covered businesses to offer any extra hours to existing qualified part-time employees before hiring any additional employees, even seasonal or temporary.

Part-time employees are employees who work less than 35 hours a week. Employers must determine if the employees are qualified and should be offered the extra hours.

The employers must exercise good faith in a reasonable manner to determine qualification. Yet the law doesn’t define qualified, making it very subjective to interpretation.

Additionally, employers must use a “transparent and nondiscriminatory process” in distributing hours among existing employees.

One difference between San Jose’s law and its counterpart in Emeryville is that Emeryville requires 72 hours for employees to accept or decline the additional hours before employers can hire temporary employees while San Jose does not.

The FAQ clarified that if an employer emails out available hours at 9 am and requests a response by noon, that the employer has met the requirements of the ordinance.

Employers are not required to offer additional hours to employees if the employees will be paid a premium for those hours worked. This would apply if the employees will work over 8 hours in a day or 40 hours in a week.

Notifications and Records

Employers must post notice of employee rights under this ordinance. The Office of Equality Assurance provides notices in English, Spanish, Chinese, and Vietnamese.

Further employers must ensure they have a process in place in order to comply with the new ordinance. They must train managers in charge of scheduling.

In addition, employers are responsible for keeping records of all schedules, hours worked, and employees for a minimum of 4 years to comply with the law. This doesn’t mean that businesses have to devote additional space to filing cabinets.

Instead, organizations that use a workforce management tool such as SwipeClock offers an Employee Self Service Portal will find that they can effectively issue communications to employees about new hours and their records are automatically retained.

Employers are responsible to keep and maintain all records that would prove compliance with the ordinance.

Records of employee work schedules

Documentation of the offer of additional work to existing employees prior to hiring new

Any other records the City requires employers to maintain to show compliance

Penalties and Fines for Non-Compliance

One of the dangers found in the ordinance is that employees claiming adverse action will enjoy a rebuttable presumption that retaliation has occurred.

The burden of proof for compliance rests on the business, as does the expense to prove it.

Fines for non-compliance can be $50 per day per violation, per employee. This can add up for businesses, but in addition, employees are able to seek civil redress in court.

This ability to file private suit can land the employer responsible for the attorney’s fees, lost wages, and penalties.

Let SwipeClock Help

In addition to the local requirements by San Jose, all of California businesses may be soon facing a similar law, as one has been introduced into the California Legislature.

Both the document retention and the ability to schedule and plan employee schedules is nearly impossible without a good workforce management software.

Additionally, these businesses have to also comply with Federal Overtime Laws, the Family Medical Leave Act and any other national or local laws that are enacted. SwipeClock provides a comprehensive array of workforce management and time tracking tools that can help businesses to more easily stay in compliance with local and national laws.

Records are effortlessly kept for years and accrual is automatically tracked and reported to employees according to the state and city laws. Additionally, with geo-timekeeping clocks, businesses can effortlessly track time worked in specific cities to ensure compliance.

About SwipeClock

SwipeClock is a leading provider of cloud-based integrated workforce management solutions that include automated time and attendance, advanced scheduling, and leave management capabilities.

SwipeClock’s workforce management solutions are sold through over 850 partners that empower more than 26,000 businesses to lower labor costs, comply with regulatory mandates, and maximize their profits. For more information, please visit www.swipeclock.com.